I save every bit of scrap when I cut into a bundle of fabric and can't seem to part with any of it. After watching Lori Holt's method of organizing her scraps, I was converted! I now keep a basket of my smaller scraps beside my cutting table and spend a few hours a month cutting them into sizes that I frequently use.
I have a template to cut Dresdens as small as one inch, but more frequently I use the 2 1/2 inch to turn my smaller scraps into a scrappy quilt that I absolutely love!
I spend several hours a week at the machine when I come home at night. Whenever I have a few minutes, its easy to sew a couple and place in my basket to applique later. I have precut layer cakes of Moda white #98 that I buy from Fat Quarter shop. They are so portable and I keep a small kit with me everywhere I go. Its an easy way to turn all those small bits and crumbs of fabric into a beautiful quilt!